Markets could be making a Lehman-like mistake
(The authors are Reuters Breakingviews columnists. The opinions expressed are their own.)
By Rob Cox and Agnes T. Crane
NEW YORK (Reuters Breakingviews) – On the Friday before Lehman Brothers went belly up in September 2008, most investors made a critical miscalculation. Based on historical precedent, namely the rescue of Bear Stearns, they assumed that Uncle Sam would ultimately come to the Wall Street firm’s rescue. Now, on the last Friday before the U.S. government faces a far larger cash crunch of its own, are global financial markets once again making a similar mistake?
U.S. home finance in limbo a year after Dodd-Frank
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
A year after the Dodd-Frank Act, the $10.5 trillion U.S. mortgage market is still in limbo. One big reason is that the law scarcely touches Fannie Mae, Freddie Mac and the Federal Housing Authority — the collection of government-run lenders that these days dominate the home loan market.
U.S. jobs rout should give fiscal hawks pause
By Agnes T. Crane and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The latest U.S. jobs report should give fiscal hawks pause. With economists expecting employment to rise by a modest 100,000 in June, the piddling increase of 18,000 proved a bitter blow for a country amid the throes of an austerity debate.
Housing reform sinks to Fannie/Freddie mash-up low
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
For the clearest sign yet that U.S. housing reform is floundering, just take a look at the latest proposal. Two lawmakers, with industry lobbyists in tow, are heralding a union of Fannie Mae and Freddie Mac, which would leave the government still in charge. Even more than other ideas floating around, it would preserve the status quo. It only goes to show just how weak the political will is for a real fix.
US muni bond tax exemption is accident of history
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
U.S. lawmakers don’t like subsidizing municipal project financing. Last year they ended the Build America Bonds program that did just that. Yet the continuing federal tax break on state and local debt is a subsidy by another name. Getting rid of it could hit smaller borrowers — but would create a more efficient, transparent market.
Investors are struggling to accept end of U.S. easing
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
The Federal Reserve’s $600 billion Treasury bond-buying program, known as QE2, is ending. At least a few investors are ready for QE3, despite no hint of it from the U.S. central bank. Though some in the markets might want it, further monetary stimulus is a bad idea.
Uncle Sam’s GSE problem getting bigger not smaller
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
The U.S. government wants to wind down Fannie Mae and Freddie Mac. But the task is getting bigger, not smaller. Toxic and hard-to-sell mortgage loans — more than $900 billion of them so far — increasingly dominate the two housing finance giants’ balance sheets.
Key transatlantic contagion channel still open
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Greece’s sovereign debt crisis has been more than a year in the making, giving many U.S. financial firms time to slash even their indirect exposure. But money market funds are still sitting on $360 billion worth of European bank short-term debt. That leaves open a transatlantic channel for euro zone turmoil to rock U.S. markets.
Greek riots make global market blues even bluer
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Images of riot police clubbing protesters through a fog of tear gas in Athens rammed home the severity of the Greek crisis to investors globally on Wednesday. With a vacuum of good news in the United States or China, it’s not surprising to see risky assets get hammered. The odd dot-com IPO aside, there’s little to bolster confidence.
Fed gets a taste of painful exit strategies
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
The Federal Reserve got a little taste of what could be a bigger dish of unsavory exit strategies. Auctions of some $30 billion of toxic assets once owned by AIG haven’t gone so well. Only half the latest crop sold, as a fatigued Wall Street fretted about what the glut is doing to mortgage bond prices. The bigger worry, however, is what it says about the fate of the Fed’s whopping balance sheet.
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